With Wrapped Bitcoin (WBTC) facing a trust crisis, various competitive products have emerged in the market, among which Coinbase Wrapped BTC (cbBTC), launched by the largest cryptocurrency exchange in the U.S., has garnered significant attention. Despite cbBTC quickly rising to become the third-largest wrapped Bitcoin in less than two weeks since its launch, concerns regarding its transparency have sparked widespread apprehension in the market.
cbBTC's Rapid Rise and Market Share
On September 12, Coinbase officially launched cbBTC, backed 1:1 by Bitcoin, operating on the Ethereum mainnet and Base. Leveraging its compliance advantages and large user base, Coinbase rapidly captured market share, putting immense pressure on WBTC, which had previously dominated the market. According to Dune data, as of September 24, cbBTC's circulating supply reached 2,944 tokens, with a market capitalization exceeding $180 million, and a trading volume of nearly $1.31 billion in the past 24 hours, primarily concentrated on Aerodrome (93.3%) and Uniswap (4.4%).
Nevertheless, cbBTC's market share remains only 1.2%, significantly lower compared to WBTC (68.5%) and BTCB (26.6%). Hassan Ahmed, Coinbase's Southeast Asia head, revealed that cbBTC plans to expand to the Solana chain, which may further drive its market expansion.
Transparency Issues and Trust Crisis
Trust is at the core of the value of wrapped assets. Shortly after the launch of cbBTC, concerns regarding its asset transparency arose, with analyst Tyler Durden accusing Coinbase of allowing BlackRock to borrow Bitcoin without providing collateral, potentially manipulating market prices through this arrangement. In response, Coinbase CEO Brian Armstrong firmly denied these claims, emphasizing that the minting and burning process of BlackRock's Bitcoin ETF is transparent and traceable.
However, doubts did not subside. Users expressed concerns over cbBTC's terms of service, believing that if Bitcoin were lost due to malicious actions or unforeseen events, Coinbase would not fully compensate but rather proportionally distribute the remaining assets. Coinbase Chief Legal Officer Paul Grewal stated that if Bitcoin is lost due to exchange reasons, Coinbase would fully compensate customers, but the exchange does not bear full responsibility for losses arising from complex customer transactions.
This explanation failed to quell external doubts, even sparking extensive discussions within the crypto community. TRON founder Justin Sun commented on social media that "cbBTC is not real Bitcoin." Meanwhile, compared to WBTC, cbBTC lacks sufficient capital backing and transparent asset reserves, raising questions about its security.
Industry Response and Future Prospects
DeFiLlama founder 0xngmi criticized cbBTC for its lack of transparency, pointing out that nearly all cross-chain bridges should provide proof of reserves (PoR) for users to verify their asset support, which Coinbase has yet to accomplish. Data analyst Hildobby also expressed disappointment over Coinbase's failure to provide proof of reserves.
In terms of regulation, cbBTC's service agreement is signed by Coinbase Inc., not a regulated financial institution, which has faced SEC charges for operating as an unregistered securities exchange, further heightening market concerns.
In the face of external skepticism, cbBTC product head Lukas Staniszewski stated that the team had already planned to implement proof of reserves and is actively advancing this work, although they had previously failed to timely disclose this progress.
As cbBTC's market performance and transparency issues continue to attract attention, how Coinbase addresses these challenges and maintains its market position remains a focal point of industry interest.
Relevant Knowledge Q&A
What is the difference between cbBTC and WBTC?
Both cbBTC and WBTC are wrapped Bitcoins, but they differ in their issuance methods and transparency. WBTC is issued by BitGo, providing an on-chain insurance fund of up to $250 million to enhance user trust. In contrast, cbBTC, launched by Coinbase, has yet to provide similar capital backing, and its asset reserve transparency is also questioned.
How does the asset transparency issue of cbBTC affect its market acceptance?
Asset transparency is a key factor in investor trust. Due to controversies surrounding cbBTC's asset reserves and terms of service, many users express concerns over its security, which may limit its market acceptance and further development. Users tend to prefer projects that can provide sufficient transparency and guarantees.
What are the market prospects for cbBTC?
Although cbBTC showed strong performance at launch, rapidly becoming the third-largest wrapped Bitcoin, its market share still falls far short of WBTC and BTCB. Coinbase plans to introduce the Solana chain in the future, which may further drive its market expansion, but whether it can resolve transparency and trust issues will be crucial for its future development.
What risks should users be aware of when using cbBTC?
Users should be aware of the following risks when using cbBTC: 1) Insufficient asset transparency may lead to investment risks; 2) Compensation limitations in the terms of service may affect the security of users' funds; 3) The lack of sufficient capital backing compared to other wrapped Bitcoin projects may pose potential losses. It is recommended that users carefully read the relevant terms and assess risks before investing.
